Solar sector will take time to adjust to honest regime: Piyush Goyal

Piyush Goyal challenges anybody to prove that solar tariffs in the country are unviable. He says India Inc is used to crony capitalism, high tariffs and profiteering.Kaavya Chandrasekaran, Sarita Singh&Himangshu Watts | ET Bureau | May 19, 2016, 07:12 IST

Power, coal and renewable energy minister Piyush Goyal challenges anybody to prove that solar tariffs in the country are unviable. He says India Inc is used to crony capitalism, high tariffs and profiteering, and needs time to adjust to an honest regime.

He added that there is no fund crunch in the power sector as the government’s revival measures have worked, but some private companies are facing financial constraint due to issues related to promoters. In an interview with ET, he also said the government is contemplating a mega fund for the power sector, besides giving boost to hydro and wind projects. Edited excerpts:

You have just reviewed Ujwal DISCOM Assurance Yojana? When do you expect it to yield results?

It is already happening. NTPC’s cost of power is down by 40-50 paisa. On an aggregate it is 15% lower. This holistic method of working is now seeping into the system at the Centre, states and the discoms. That’s the differentiating factor which is giving me a lot of happiness. The energy efficienct bulbs programme as well as sale of renewable energy certificates has shot up manifold in the last six months. The whole stress is reducing.

What is your take on high interest rates?

I would like to see lower interest rates, particularly when all macroeconomic parameters are so strong. The wholesale price index has been in negative territory for 17 months which was getting scary. It could lead to a negative GDP type of situation. I am glad that at least it has come to a level territory now. But considering other macro indicators, it calls for much lower rates. But that’s for the experts to calibrate how and when. It is not my domain.

Most private power companies are debt-ridden. Do you think it is time to reconsider a power fund?

I don’t’ know who is saying they don’t have money, given the revival of almost all power plants that were stressed. A few are pending but most of it is seen as promoters’ problems. If there is a bad credit, you can’t expect the banks to get them off. I don’t think any reasonably sound company is facing any financial problems. Rural Electrifiction Corp and Power Finance Corp are looking for good borrowers. There is no shortage of money in this country. The next level of sectoral funds, I may be considering it. The nation has moved in dollar terms — from million to billions.

Is that reflected in increased interest by foreign investors?

For me, domestic or foreign doesn’t matter. I have to do my job. I want to give equal opportunity. I’d rather strengthen the Indian investor. Unless you empower your domestic investor and domestic industry, and domestic confidence in the sector, no foreigner is going to come.

Solar tariffs have not declined beyond Rs 4.34 per unit. Are you contemplating dollar denominated tariffs?

So far, all I got was criticism — that I have killed the market; prices are too low; I got it down to unviable levels. What do I do? We have created a transparent, honest, equalopportunity-for-all platform. The private sector is bidding. International companies are bidding. Who is cribbing? All those who say informed sources are saying bids are too low are lying. I challenge anybody to prove that the bids are unviable. If they are bidders themselves, then don’t bid, I never asked you to bid. Now let me tell you why those bids are viable. It’s transparent and honest. You don’t have to pay a bribe. It is competition. Many of them are parks — so land, transmission and uncertainties are taken care of. All of them come with a PPA. You don’t have to be worried about what will happen in the future. I have taken care of counter-party risk. I am contemplating dollar-denominated tariffs.

Surely you understand why people are saying low solar tariffs are unviable...

They were so used to crony capitalism. They were so used to CERC-determined high tariffs. They were so used to profiteering. They were also so used to having to provide for extraneous cost. They will take some time to adjust to an honest regime; give them some time. Don’t worry.

Is this specific to the solar industry, or others also?

The whole business climate. There are lots of people who say ‘ground pe nahin kuchh dikh raha hai’, or ‘money supply shortage hai’ etc. etc. Yes, there is a black money supply shortage.

What will be your focus in the third year of your tenure?This year’s agenda is three-fold. I am focusing on increasing demand and transform hydro and wind sectors, which for their own folly, have gone down. Solar accepted my bidding process and see the transformation. The wind industry kept resisting and the cost-plus regime continued. They are not getting enough traction, enough PPAs. Cost-plus is an inefficient way to do things. Now they have approached me and say they would also want to go in for bidding.